The Internet has accelerated “age compression,” and American children have more sophisticated consumer tastes than those of past generations. Children experience more independence than ever before, which includes individual shopping habits. It has been estimated that more than two-thirds of all teens, and more than one-third of children between the ages of five and 12, have now purchased or researched products on the Internet. American youth aged five and older spend billions of dollars each year purchasing consumer goods online.
Since advertisers believe many brand preferences are set by age 12, merchandisers are anxiously probing this market and devising new methods to tap its potential. Growth in this space is hampered, however, because children cannot use credit cards or payment mechanism requiring a credit card as back-up. While some Internet vendors offer Web-only debit cards to teens, these are limited to goods purchased at an affiliated-Web site.
Of course, parents worry about allowing their children to shop online. Concern includes their inability to supervise online purchases, financial responsibility, direct marketing and privacy. In the late 1990s various Wed sites emerged with “digital wallets” funded by a specified cash amount that draws, much like debit cards, on a savings account to prevent children from overspending. Other sites permitted parents to stipulate where kids can shop.
Sites such as ICanBuy, RocketCash, Cybermoola, and DoughNET let parents set up accounts for their kids with a credit card, cash or money order. Parents can set spending limits and keep track of what's being purchased. These and other sites positioned themselves as environments where kids can learn to manage money and credit. Unfortunately, most of these sites closed due to the “dot-com crash” that came a few years after the sites opened.
Several patents have also issued that allow children to shop online. The environment disclosed in U.S. Pat. No. 5,845,260, for example, enables a child to receive a desired on-line service on the basis of his own judgment by setting an upper limit to utilizable services. A predetermined service is provided from a server to user terminals via a transmission medium. A fee for such service is collected from each user individually. The fee collection includes the steps of opening, in the server, an imaginary account for a child of the relevant user with a limited maximum amount, and withdrawing from the imaginary account the fee for the service provided to the user's child. The server can provide a predetermined service to the relevant user's child within a range of the limited maximum amount preset in the imaginary account. When withdrawing the fee from the imaginary account, the server can restrict the service providable to the terminal. Thus, the parent enables his child to receive a desired on-line service, such as on-line shopping or video-on-demand, without concern for over-spending.
U.S. Pat. No. 6,173,269, for example, teaches a method and apparatus for executing electronic transactions with teens, especially where such transactions are limited only to those vendors that have been approved by the teen's parents. In one embodiment, a virtual automatic teller machine (VATM) is provided in which funds are transferred from an existing account, such as a saving account, checking account, or credit card account, to an Internet passport account. The VATM account mimics a bank account, i.e. it gives the user the appearance of an ATM machine. Functionally, the VATM allows the user to transfer funds from an existing account into the Internet passport account. The VATM does this by emulating an ATM machine as it appears to the Automated Clearing House (ACH) system. The ACH system is a separate network from the Internet. Rather than acting as a trustee for a teen account, the invention provides a method and apparatus that allows a merchant to withdraw funds directly from the teen's account automatically.
According to U.S. Pat. No. 7,203,656, educational material is provided at a child's local computer. On completing a particular educational task, a child is rewarded with points that are accumulated and stored. The points can be redeemed towards the purchase of goods and services offered through the system by commercial participants. For example, the child may order goods and services by selecting from menus presented by the central computer, which, in turn, orders the selected items by telephone, e-mail, mail, or otherwise from a vendor or distributor for delivery. The central computer may also send a message to the local computer to print out certificates redeemable at participating vendors of goods and services. Also, points may be redeemed by downloading requested goods available in digital electronic form, such as software, games, music, and video. It is preferred that the offered goods and services be items desirable by the children so that the prospect of obtaining these items is a motivation for the children to diligently pursue the educational materials available in the system.
Parents have their own way of accessing the system of the '656 patent through their own, usually different, password. Parents preferably use the system for several purposes. First, parents support their children's purchasing activity financially. Preferably, the parent authorizes the system to periodically (e.g. monthly) allow purchases to be made through the redemption of the child's points, up to a certain limit, using the parents' credit card account, or other payment arrangements (e.g., though the use of electronic cash or direct account withdrawal). The parent can also authorize a system-initiated increase in the purchasing power of the child—a “bonus—for example, thereby permitting certain advertising messages to be displayed to the child as the child uses the system.